Dissecting what went wrong with the Quincy downtown project

Tuesday

Apr 1, 2014 at 2:07 AMApr 1, 2014 at 7:41 AM

A week after Mayor Thomas Koch cut ties with Street-Works, the city's development partner in the $1.6 billion plan for downtown redevelopment, the city council and Koch's administration on Monday examined why the deal died and tried to plot a way forward.

Patrick Ronan The Patriot Ledger @pronan_Ledger

QUINCY – What went wrong? That’s the question being asked in the post-mortem of Quincy’s first major bid for a revitalized downtown.

A week after Mayor Thomas Koch cut ties with Street-Works, the city’s development partner in the $1.6 billion plan for downtown redevelopment, the city council and Koch’s administration on Monday examined why the deal died.

“Street-Works took their eyes off the prize,” City Planning Director Dennis Harrington said.

Harrington was referencing Street-Works’ decision in late 2012 to put a block called Merchants Row – a plan to build new residential and retail space on Cottage Avenue, Chestnut Street and the 1400 block of Hancock Street – ahead of its timeline for the first major stage of redevelopment called Step 1, which included several blocks of new retail, residential and office space as well as new parking complexes. Merchants Row construction stalled last October when project investors stopped financing Street-Works, leaving behind a gaping hole on the block. Meanwhile, the developer didn’t have enough of its own money to move forward with the Step 1 stage of the project.

Last week, Koch voided the city’s 2010 land disposition agreement with Street-Works after the developer failed to meet key project benchmarks, thus killing the $1.6 billion downtown plan. Koch has said he’ll break the project into several different phases going forward and partner with a different developer for each phase.

Ward 2 Councilor Brad Croall recommended the city verify that future developers have enough of their own money before partnering with them.

“If we’re eating the elephant in small chunks going forward, then wouldn’t it make sense to have that ‘show me the money’ conversation up front,” Croall said.

Harrington said the city couldn’t ask for specific financial plans from Street-Works before entering the 2010 agreement because the developer’s project was too broad. But Harrington said he expects proof-of-financing to be a part of the city’s future deals with developers.

“After this experience, I think that probably will be the way it’s done,” he said.

Jim Fatseas, Koch’s chief of staff, said the mayor plans to hire a consultant that will guide the city in finding new development partners. He said the costs of hiring a consultant and issuing public requests for development proposals will be paid for by $850,000 sitting in escrow from payments that Street-Works made for various deadline extensions in recent years.

At-Large Councilor Doug Gutro asked whether the city was at risk of being sued by Street-Works. Robert Fishman, the city’s attorney overseeing the downtown deal, said it was highly unlikely.

“One reason that we haven’t seen a push back from Street-Works is because it’s very clear they defaulted, and there’s really no argument,” Fishman said.

Fatseas said Quincy Mutual Fire Insurance, a project investor, is in the process of getting ownership of the 1400 Hancock St. property, which includes the Granite Trust Building, from Street-Works as part of the investor’s plan to privately develop the Merchants Row block. Fatseas said Street-Works’ other tentative deals to purchase downtown properties are likely on the verge of expiring, if they haven’t already.

One councilor inquired about the city’s relationship with National Realty and Development Corp., the New York-based firm that had planned on investing between $100 to $125 million to build 400,000 square feet of retail space in Quincy Center, including a grocery store and a movie theater. Fatseas said National’s deal was with Street-Works – not the city – but added that the real-estate firm has expressed interest is maintaining discussions with the city going forward.

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